Deutsche likely to pay more than $2B over Libor-rigging: Source

Published 4:56 AM ET Thu, 23 April 2015
Reuters

Deutsche Bank is likely to pay more than $2 billion to U.S. and U.K. authorities over the manipulation of a key interest rate benchmark, more than any other bank has been penalized over the rate rigging, a person familiar with the matter said.

Authorities are preparing to announce a settlement as soon as Thursday, Reuters reported earlier this week.

Patti Domm | CNBC

Deutsche Bank signage.

Deutsche, Germany's largest lender, is among the last major banks to come to terms with authorities stemming from an investigation of the London interbank offered rate, or Libor, which banks charge each other for short-term loans. In 2012, UBS AG agreed to pay $1.5 billion to authorities in a global settlement and Barclays Plc paid $453 million.

Authorities have found that banks submitted false figures aiming to manipulate the rates.

Libor and related benchmarks are used to set interest rates for trillions of dollars' worth of loans around the world, from mortgages and student loans to credit cards and complex derivatives.

"We continue to work with the authorities that are reviewing interbank offered rates matters," Renee Calabro, a spokeswoman for Deutsche Bank, said in a statement.

The authorities involved include the U.S. Department of Justice, the Commodity Futures Trading Commission in Washington, the Financial Conduct Authority of Britain, and New York's Department of Financial Services.

Negotiations also are expected to result in a guilty plea by a unit of the German bank, Reuters has reported.

Officials for the Justice Department, the CFTC, and the New York regulator declined to comment. The FCA could not immediately be reached.

Deutsche Bank announced on Wednesday that it expects to report litigation costs of about EUR 1.5 billion euros (US$1.61 billion) for the first quarter 2015.

Despite the costs, the bank said it would be profitable in the first quarter and would report near record revenues.

Deutsche Bank's potential record-breaking deal may have been affected by the New York regulator's involvement in negotiations.

The agency, which was created in 2011 from the state's banking and insurance departments, was not involved in earlier Libor settlements. It was ramping up in 2012 when Barclays settled, and it does not oversee UBS.

The agency landed on the map in 2012 when it threatened to revoke Standard Chartered Plc's license to operate in New York over violations related to U.S. sanctions involving Iran and other countries.

The Wall Street Journal reported earlier Wednesday that Deutsche Bank would announce a settlement of more than $2.15 billion in response to charges that its employees tried to manipulate interest rates.